Saudi Energy Minister Sees Output Freeze as Positive

Saudi Energy Minister Sees Output Freeze as PositiveSaudi Energy Minister Sees Output Freeze as Positive

Saudi Arabia’s energy minister said an oil-output freeze would be "positive" if it happens, while ruling out a cut in production.

"We will be willing to listen to our colleagues, what they have to offer in that area," Khalid Al-Falih, who became Saudi energy minister in May, said in an interview on Thursday in Los Angeles, World Oil reported.

"I don’t believe that an intervention of significance is required. I certainly don’t advocate a cut."

Crude oil has gained about 13% since OPEC said it would meet informally to discuss prices and supply, on speculation that the group could agree to freeze output levels.

There is an increasing agreement between OPEC and non-OPEC producers to move to manage oil production, as market forces are not enough to correct prices, OPEC’s Secretary-General Mohammed Barkindo told Al Hayat daily on Thursday.

Producers from OPEC will meet on the sidelines of an energy policy group in Algeria. The meeting of OPEC and other producing countries in April ended without agreement in Doha when Saudi Arabia demanded that Iran be part of any deal to limit output.

Iran had ruled out a ceiling on its production until it recovered the output levels it had before the US and European Union tightened international sanctions on its oil industry in 2012.

“A freeze signifies that everybody is content with where the market is today and they want it to be trending in that direction," Al-Falih said. "It is trending towards soaking up and absorbing, removing, the inventory overhang."

OPEC output increased to 33.2 million barrels a day in July, according to data compiled by Bloomberg. The group’s capacity is 36.9 mbpd, with most of that coming from Saudi Arabia, the world’s largest exporter. That may limit the effect of a freeze.

"There is the freeze that is official and there is the freeze that is practical," Al-Falih said. "Today, when you think about it practically, many countries today are at their capacity. Their room for an increase are limited, certainly for the short or medium term."